CB Chief dispels need for recapitalisation by 2025

Wednesday, 24 January 2024 00:32 - - {{hitsCtrl.values.hits}}

Clarifies IMF’s reference to recapitalisation; says it is only relevant if CBSL’s balance sheet turns negative post-debt restructuring
Affirms positive equity at end of December balance sheet
Highlights CBSL’s transition from negative capitalisation in 2022 to a positive status last year despite economic challenges

Central Bank Governor Dr. Nandalal Weerasinghe dismissed the necessity for a recapitalisation by 2025, asserting that the institution had maintained a positive balance sheet even after enduring an economic crisis and undergoing debt restructuring.

Speaking at the post-Monetary Policy Review meeting media briefing yesterday, he clarified that the International Monetary Fund’s (IMF) mention of CBSL recapitalisation in 2025 is contingent on the Central Bank’s balance sheet or net worth turning negative following the impact of the debt restructuring process.

“As of the end of December, we sustained a positive equity. I don’t believe there’s a requirement for us to pursue recapitalisation. The IMF only highlighted it to ensure Government commitment if recapitalisation becomes necessary post-debt restructuring process,” he explained.

Highlighting the positive transformation, Dr. Weerasinghe noted that CBSL experienced negative capitalisation in 2022, which reversed to a positive status last year despite the economic crisis and debt restructuring.

“I don’t see any reason for further deterioration unless there’s a significant market shock,” he stressed, expressing confidence in the institution’s financial stability moving forward.

CBSL seeks clarification from banks over non-compliance of policy rate

CBSL keeps policy rates stable to curb inflation, interest rate